Are you asking good insurance questions? Which question do you think is more important: “Why did this happen?” or “What can be done about it?”
Your Oklahoma car and home insurance premium is due again, and the price has gone up. It usually goes up, right?
Your logical brain tries to compute this increase since you have not filed any claims and your circumstances have not changed. You have the same car, house, family, job, etc.
What are the reasons insurance rates increase? Do you really want to know? You should.
The answer is usually more complicated than most people have the patience for. But your insurance plan is part of your financial life and can have significant consequences depending on the insurance coverage choices you make.
Think about someone going to their attorney or CPA to discuss a legal or tax issue. It is important for that professional to explain to you why certain things are the way they are, and how the “system” works.
It’s not important that you become an expert on the subject, but you should at least have confidence that the person giving you advice is one.
As an insurance advisor, one of the most common questions I’m asked is, “Why did my insurance premium increase?”
This question comes in for both car and home insurance. So, let’s look at the major factors that determine Oklahoma car and home insurance costs.
You can’t run a red light in your house. You won’t have a plumbing leak in your car.
Obviously, the factors that affect the cost of home and car insurance are different. But there are some factors that impact the cost of both.
Top car insurance rating factors
Insurance companies put everyone into categories. Insurance rates are based on statistics. Period. Categories make statistics easier to measure. You may be the exception to your group when it comes to statistics, but I never said the factors would be “fair”.
- Your age and gender. You are lumped in these groups whether you like it or not.
- Young single men will pay higher insurance rates because “AS A GROUP” they are more likely to cause an auto accident than any other group. You may be the exception, but I never said these factors were fair.
- Marital status.
- Married people of either sex and any age, are less likely to cause an accident than their single counterparts.
- Where you live.
- Insurance companies know what roads produce the most accidents, what neighborhoods have high rates of theft and vandalism. So where you live, not just your zip code, but whether it’s an apartment or a house can, and usually will have an effect on the cost of your car insurance.
- Driving record.
- This may be the first factor that you actually think matters. The insurance companies agree with you! They may charge you a higher rate if you’re single, but if you have too many traffic tickets, they may not offer you coverage at all…even if everything else about you is pristine.
- Number of claims.
- Claims can certainly result in higher premiums, but can also make you ineligible for coverage at all with many companies. Why? You’ve proven you are a risky driver to do business with.
- Type of vehicle.
- This one has a lot of mythology surrounding it. Red cars, sports cars, 4-door cars: These factors only matter if it makes the car more expensive to repair.
- Remember the car doesn’t wreck itself. But certain types of drivers gravitate to certain types of cars. Risky people drive sports cars. Safer drivers tend to drive the 4-door “boring” cars.
- Your credit score. -This one upsets many people.
- Why would insurance companies care about your credit? Well, they don’t. At least not like you think.
- Your “credit history” is another picture of your “behavior”. Some people have a credit history with payment delinquencies, credit over-extension, and bankruptcy. Some have credit behavior that shows far more reliable and “safe” behavior.
Top home insurance factors
- Age and type of roof.
- When you look at your house, you see your family memories. You see the blood, sweat, and tears you’ve poured into making it a home for your family. It’s personal.
- When an insurance company looks at your house, they see a ROOF. That’s not much of an exaggeration.
- In Oklahoma, the most likely claim a homeowner will file is for their roof. The older your roof is, the more likely you will file a claim. Why? Because as your roof gets older, your shingles are wearing out and even a minor hail storm could total it.
- If you have an inexpensive, thin asphalt shingle, you’ll pay more for insurance than if you have an impact-resistant shingle. Why? Because that thin shingle will get beat up a lot quicker.
- Age and construction of home.
- The age of your home is also the age of your plumbing. As water pipes get older they are more likely to leak. Water leaks are the 2nd most common claim for a homeowner.
- The physical features of your home like square footage, the number of bathrooms, and garage size, just to name a few will determine how much it will cost the insurance company to pay to have another house like yours re-built if the worst happens.
- Number and type of claims.
- Like your car insurance, the number of claims will impact your cost. But not all claims hurt your premium. Do I have your attention? If you have a hail claim, you will probably have a new roof. Which means you will likely have a better premium. Ironic, isn’t it?
- Credit score… Same as on the auto factor.
These factors are by no means an exhaustive list of all the factors an insurance company will use to determine the unique premium you will be charged.
Insurance for cars and homes is not like the products you would buy at a retail store. Milk might cost $3.79 at the grocery store. A refrigerator might cost $899 at the appliance store. These things are the same price no matter who buys them.
Insurance pricing is very complex. It is highly unlikely that any two people would have the exact same premium.
Can insurance rates be fair?
I know what you’re thinking. “Is that fair?” It actually is.
In general, groups of people can have common characteristics and similar risks, but each person has unique risks that influence the premium they will be charged.
What about the cost to repair a car or house?
There are many different things that can be damaged on your car and house, and an insurance company has to be prepared for them all.
What if the cost of a car part increases? What if the cost of labor to install a roof increases?
Even seemingly unrelated events, such as a hurricane in Texas or a wildfire in California, can affect the price of building and repair materials in Oklahoma.
I imagine with every sentence of this you are thinking, “I know that, but I still don’t think my rates should go up if I didn’t file a claim.”
The problem with asking “why” is it often leads to understanding why. People believe this knowledge will make them feel better. It often doesn’t.
The “why” is important, and needs to be asked. I hope this information has helped you understand why insurance rates are the way they are.
But the question of “What can be done about it?” is where I can help in a practical, bottom-line way. I can help you build an insurance plan and stop the cycle of just, buying insurance.
You should have the peace of mind that if a loss occurs, the promise you’re paying for will be kept by your insurance policy. I can help you understand what is really impacting your insurance rate both positively and negatively.
I can help you take advantage of every discount and deductible break-point available to keep your premiums as low as practical for you. Full disclosure here: Your current insurance agent or company can do this too. But, are they?
I hope you’ll call us at 405-340-0606 to start a conversation to begin a beneficial business relationship.
Or, just complete this short form, and we’ll reach out to you.